By Leigh Armstrong

After spending months debating the merits of two vastly different valuations of 66 acres of borough tidelands leased to White Pass & Yukon Route, the assembly has decided to ask its longtime contract appraiser to update its 2018 evaluation.

Assembly members tied 3-3 on the motion at the July 10 meeting, with Mayor Andrew Cremata casting the deciding vote to direct Horan & Co., of Sitka, to update its appraisal of the property around the ore dock based on current use of the land.

Horan’s appraisal of the property at $2.2 million has not changed in a decade. Any increase in the valuation would trigger higher annual lease payments by WP&YR to the borough. The lease fee stands at $172,000 a year.

The 55-year lease, signed in 1968, allows for rental adjustments every five years based on the property’s fair market value. The borough has not set the 2018 adjustment because of the ongoing debate over the property’s market value. The lease expires in 2023.

Assemblymembers Orion Hanson, Dave Brena and Jay Burnham opposed the update by Horan & Co., with assemblymembers Dan Henry, Tim Cochran and Steven Burnham in support. 

The Horan appraisal was turned down earlier this year because the assembly decided it was not accurate. The dispute has been over whether — and how much — to count the value of improvements to the property.

Horan was never given the opportunity to update its appraisal, and Cremata suggested July 10 the assembly provide the contractor with all information needed to update the appraisal based on current use of the land.

Steve Burnham said the entire appraisal process has been the assembly fighting with each other without making progress. “If (the Horan appraisal) is the direction we’re going to go, the assembly needs to direct the manager by vote to do it and when it comes in, pass it. Doesn’t matter what it says,” Burnham said. “We just need to move forward and stop negotiating among ourselves about it.”

Brena said the Horan appraisal wasn’t just voted down for its interpretation of the lease, but because of the quality of the work, which he said was inferior to a competing appraisal. “We’ll be in the position in having to defend an appraisal that may be flawed,” he said.

Instead of a redo by Horan, Brena instead said the assembly should order and approve an updated appraisal by the nationwide firm Integra, which, in a 2018 valuation for the borough, set the value of the leased tidelands at $14.7 million. At that appraisal, the annual lease fee would be $882,000.

The assembly on June 20 voted down acceptance of the Integra appraisal for a second time.

The assembly initially rejected the Integra and Horan appraisals amid efforts to find a third appraisal that would meet the needs of WP&YR and the municipality. 

WP&YR opposed the Integra appraisal, asserting that it overvalued the property. In a letter to the borough, Bob Berto, president of WP&YR, said the Integra appraisal did not follow the lease terms when it included the value of fill put in by WP&YR.

“As you are aware, all improvements, except for dredged fill,” remain the property of the company and can be removed of the end of the lease and should not be included in the appraisal, Berto said.

Hanson said he preferred that the assembly work directly with WP&YR to determine the property value, adding that the assembly could reject the revised Horan appraisal, too. Brena, however, said the lease rates could not be negotiated. The lease terms require an appraisal, he said.